Two 1099-Rs: 2023 and 2024 IRA excess contributions

[husky23]

Hello,

In 2023 I contributed $6,500 to my Roth IRA. I ended up surpassing the income limit and had to withdraw it as an excess contribution which I did in February 2024 while doing my taxes. I of course did not receive a 1099-R for this in time for filing. If I look back at my 2023 return, I see $6,500 in the excess contribution section and $390 (6%) as "additional tax". 

In 2024 the same thing happened with my $7,000. I contributed in January but realized by October I would have to withdraw it and did so.

Now that I am doing my taxes for 2024, Vanguard sent me two 1099-Rs in the same file for both of these events. Since both excess contributions were removed in 2024 (even though they pertained to different contribution years), do I import both 1099-Rs into this year's taxes? Or only the one that corresponds to the 2024 contribution/withdrawal?

Turbotax tells me I also have to amend my 2023 taxes. I assume when I do that, they want me to enter only the

1099-R that corresponds to that year's removal. So is it correct to import both this year? 

Any help is appreciated. Thank you.

[RobertB4444]

Since you already put the information from that 2023 1099-R on your 2023 return (even though you didn't have it yet) you don't need to amend 2023.  You just put in the 2 for this year and you should be good to go.

@husky23 

[dmertz]

"If I look back at my 2023 return, I see $6,500 in the excess contribution section and $390 (6%) as "additional tax"."

You must amend your 2023 to remove that penalty and enter the code JP 2024 Form 1099-R because the amount in box 2a of that form is taxable on your 2023 tax return, not on your 2024 tax return.  When going back through the Roth IRA contribution, when TurboTax asks if you had the excess contribution returned before the due date of your 2023 tax return, answer that you had $6,500 of contribution returned.

[husky23]

Thanks. Another issue I am running into is when I import the 1099-Rs, the next question is if I took disaster distributin (no), then it asks for the value of the IRA as of Dec 31, and finally it says "Let's see if we can reduce your early withdrawal penalty". The next screen says "Identify the plan" and my only options are qualified retirement plan, nonqualified annuity, modified endownment contract. Roth IRAs are none of these but it doesn't let me continue unless I choose one.. 

If I choose qualified retirement plan, the next screen has the "Corrective distribution" field I believe I should use but the description of this screen clearly says "If you used the money you took out of a retirement account (other than an IRA)..." how else can I input the corrective amount if not through here?

[dmertz]

For a distribution from a Roth IRA, make sure that you've included the code J from box 7 of the payer's Form 1099-R  in box 7 of TurboTax's 1099-R form.

[husky23]

The only way I can see to get through this is by uploading the 8J 1099-R by itself which will ask me what I did with the IRA money. Then I upload the PJ one separately and it tells me I need to amend 2023. At that point, I think I can quit the rest of the questions as I already told it about the 8J money earlier on and my taxes due number was adjusted to reflect that. Because if I continue the line of questioning it gets to "identify the plan" and none of the options are relevant. 

Before, I was uploading both documents at the same time which seemed to skip the IRA question and go straight to "identify the plan" where I would get stuck.

Problem solved..?

[DanaB27]

You do not need to enter the 2024 Form 1099-R with codes PJ on your 2024 return unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2024 Form 1099-R with codes PJ into the 2024 tax return since the withholdings are reported in the year that the tax was withheld. The 2024 code P will not add the income to the 2024 tax return income but the withholdings will be applied to 2024.


As dmertz mentioned you will have to enter the 2024 Form 1099-R with codes PJ on your 2023 tax return.  Please see How do I amend my federal tax return for a prior year?

To remove the 6% excess penalty on your 2023 return:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Continue until the penalty screen and enter the excess contribution amount withdrawn.

To enter Form 1099-R with codes PJ on your 2023 return:

1. Click on the "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
4. Click "Continue" after all 1099-R are entered and answer all the questions.
5. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

[husky23]

"You do not need to enter the 2024 Form 1099-R with codes PJ on your 2024 return unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding."

Yes this is the case. As I withdrew my 2023 contribution in February 2024, the taxes for it were withheld in 2024. I definitely need to add both documents to this year's taxes and then separately also go and amend the 2023 taxes.

The issue is when adding both documents to my 2024 taxes, I do not get asked "Did you use your IRA to pay for any of these expenses?". Instead I get asked "Identify the plan.." and none of the options are IRA-suitable. The only way I can get it to ask me "Did you use your IRA..?" is by uploading the 8J 1099-R alone and going through the questions for it.

If I then go and add the PJ one as well I go through a series of questions that ends in "Let's see if we can reduce your early withdrawal penalty" and the next question is "Identify the plan: Qualified retirement plan, nonqualified annuity, modified endowment contract" It forces me to choose one to continue even though IRAs are none of these three options.